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Risks when dating documents in 2020

Do you use the short form year when dating documents?

       

The risk is that formatting the date as DD/MM/YY leaves the year able to be altered by the adding of two digits after the ‘20’ to (fraudulently) post or pre-date the document.

It would be wiser, as a standard habit to always write ‘2020’ in full when dating documents.  Doing so means the date cannot be altered or manipulated.

 

 

AcctWeb

Stage 2 – Covid-19 stimulus package.

Detail on what the second stimulus package means to your hip pocket, Centrelink payments and staff retention.

 

The announcements for individuals, retirees, households and employers: 

  • Temporary early release of superannuation for those in need
  • Reducing the minimum drawdown rates for superannuation income streams for the 2019/20 and 2020/21 years
  • Reducing the deeming rates by a further 0.25%
  • An additional $750 lump sum for pensioners and concession card holders
  • Additional income support payments for the unemployed
  • Keeping staff employed

NB: There is another article on our site that covers details of Stage 1 of the Government's Covid-19 stimulus package.

 

Release of super funds:

The Federal Government has decided to allow financially stressed people to access $10,000 tax free of their super fund this financial year and $10,000 next financial year. 

Treasurer Josh Frydenberg made the announcement on Sunday as part of a broader $66 billion stimulus package to mitigate the fallout from the outbreak that has killed more than 13,000 people worldwide and is tipped to plunge the global economy into a recession.

“These extraordinary times demand extraordinary measures,” the treasurer said in a statement. “The government is taking unprecedented action to strengthen the safety net available to Australians that are stood down or lose their jobs and increasing support for small businesses that do it tough over the next six months.”

Eligibility: One of the following requirements must be satisfied for the early release of super: 

  • You are unemployed; or
  • You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment, special benefit or farm household allowance; or
  • On or after 1 January 2020:
    • You were made redundant; or
    • Your working hours were reduced by 20 per cent or more; or
    • If you are a sole trader – your business was suspended or there was a reduction in your turnover of 20 per cent or more.

If eligible, individuals can apply directly to the ATO via MyGov (www.my.gov.au) and will be required to certify that they meet the eligibility criteria. The ATO will then issue a determination and contact the super fund directly to release the money.

It is anticipated that payments will be available from mid-April. Payments will be received tax free and will have no impact on existing income support payments.

 

Reduction of minimum pension drawdown requirements

As we saw in the Global Financial Crisis (GFC), a temporary reduction to the minimum payment rules will apply for superannuation income streams to assist retirees who would otherwise be forced to sell down assets to meet their minimum pension.
 
For the 2019/20 and 2020/21 financial years, the minimum drawdown rates will be:


  ​

Deeming rates.

Further to the recent decrease in deeming rates announced earlier this month, the Government will reduce deeming rates by another 0.25% from 1 May 2020. The new rates are provided in the table below.

Additional $750 lump sum payment 

Two separate lump sum payments will now be available to eligible social security, veteran and other income support recipients and eligible concession card holders as follows:
 
Payment one – available to those eligible income support recipients and concession card holders at any time between 12 March 2020 and 12 April 2020.
 
Payment two – available to eligible payment recipients and concession card holders on 10 July 2020.
 
The two lump sum payments will be received tax free and will not impact existing income support payments.

The payment will be made automatically from July 13 to about 5 million Australians, including those receiving the age pension, a carers allowance or family tax benefit and Commonwealth senior card holders.
 
For payment one, the qualifying payments and concession cards are as follows:

To be eligible for payment two, the same list applies EXCEPT if you are entitled to the Coronavirus Supplement (explained below).

 
Additional income support for the unemployed and faster access

The Government will introduce the Coronavirus Supplement, a $550 per fortnight payment available for the next six months to eligible payment recipients. Additionally, access to income support will be expanded and the claims process accelerated to ensure timely payments for those in need.
 
Eligibility: The payment categories eligible to receive the Coronavirus Supplement are:

  • Jobseeker Payment (including all the payments that are currently moving to Jobseeker Payment)
  • Youth Allowance Jobseeker
  • Parenting Payment
  • Farm Household Allowance
  • Special Benefit recipients

While the Coronavirus Supplement is available (temporary measure for approximately six months), the Government will expand access to income support (such as Jobseeker Payment) to:

  • Permanent employees who are stood down/lose their job
  • Sole traders/self employed
  • Casual workers
  • Contract workers

The standard allowance income test must be met however the assets test that normally applies to allowances (ie $1 over the asset test threshold results in no payment) will be waived for the Coronavirus Supplement period.
 
Some waiting periods will also be reduced or waived. The standard one week Ordinary Waiting Period, the Liquid Assets Waiting Period (LAWP) and the Seasonal Work Preclusion Period will all be waived.
 
How to apply: The Government is encouraging all applications to be made online or over the phone if internet access is not available. Measures have been adopted to accelerate the claims process such as removing the requirement for Employment Separation Certificates and the need to make appointments with an employment service.
 
The commencement date for the Coronavirus Supplement and the expanded access to income support is 27 April 2020.

 

Casuals and sole traders

If you've found yourself affected by the economic downturn, you'll be able to access a “coronavirus supplement” of $550 a fortnight for the next six months.

That's on top of other benefits — so if you're already receiving payments through Jobseeker (formerly known as Newstart), you can claim both.

Sole traders and casual workers who are currently making less than $1,075 a fortnight will be eligible to receive the full supplement.

In practice, that means if you're a single parent (receiving a maximum fortnightly payment of $612 through Jobseeker), for example, and you meet the criteria, you'll take home about $1,162 a fortnight.

“This means anyone eligible for the maximum Jobseeker payment will now receive more than $1,100 a fortnight, effectively doubling the Jobseeker allowance,” Treasurer Josh Frydenberg said.

Sole traders or casual workers who have had their income or hours reduced by 20 per cent or more as a result of coronavirus will also be able to access to up to $10,000 of their superannuation tax-free.

 

Employers who want to keep staff

Not-for-profits and small businesses with a turnover under $50 million will receive a tax-free cash payment of up to $100,000 to help them retain staff and continue operating.

The Government expects 690,000 businesses employing 7.8 million people and 30,000 not-for-profits will be eligible for measures in the stimulus package.

It doesn't mean extra pocket money if you're an employee, but by linking the payments to staff wage tax withholdings, businesses will be given an incentive to hold on to more of their workers.

“We know that small businesses are enormously resilient but this is really hurting them,” Mr Morrison said.

“Whether it is a coffee shop or mechanic or hairdresser… by providing at a minimum $20,000 and up to $100,000 for small businesses who employ people, [it] gives them a chance to get to the other side.”

Expect more to come…

An important thing to keep in mind is that this is the second suite of measures announced by the Government in just a matter of weeks.  Details about the first stimulus package can be read here.

 

For more information

For more information on these measures and other announcements made by the Australian Government visit treasury.gov.au/coronavirus or speak with your Financial Planner or Accountant.   

 

 

Source:  Several sources and the ATO.

Australian Taxation Office (ATO) debts may affect your credit rating

Businesses with tax debts need to be aware that the ATO will now be able to disclose the details of their tax debts to credit ratings agencies, which could potentially affect the ability of the business to obtain finance or refinance existing debt.

       

Generally, only businesses with an ABN and debts over $100,000 and that are not “effectively engaged” with the ATO will be affected. The ATO is planning a phased implementation which will consist of undertaking education efforts before it targets companies, followed by partnerships, trusts and sole traders.

The aim of the laws, according to the government, is to encourage more informed decision-making within the business community by making large overdue tax debts more visible, and to reduce the unfair advantage obtained by businesses that do not pay their tax on time.

As always, communication is the best action so working out a payment plan with ATO will mean you are “engaged” and should not be listed.

AcctWeb

Statistical picture of Australia – Update

The data contained on this website can help with many day to day decisions.

         

Please click on the following link to see all this interesting information. The areas covered are:

  • Overview
  • Markets
  • GDP
  • Labour
  • Prices
  • Money
  • Trade
  • Government
  • Business
  • Consumer
  • Housing
  • Taxes
  • Climate

 

Access all this data here.

 

 

tradingeconomics.com/australia

Absentee Property Owner – Tax Whack – Victoria

The State of Victoria State Revenue Office (SRO) coffers must be bulging from land tax imposed on absentee owners.

       

As a simple illustration for land with a site value of $3m normal land tax would be $24,975 p.a. but if the owner is non-resident, tax is $84,975 p.a.

An absentee individual is any individual who:-

  • is not an Australian citizen or permanent resident
  • does not ordinarily reside in Australia, and
  • was absent from Australia
    • on 31 December of the year prior to the tax year, or
    • for more than six months in total in the calendar year prior to the tax year.

An absentee corporation is a corporation:

  • that is incorporated outside Australia, or
  • in which an absentee person(s) has a controlling interest.

An absentee trust can have at least one beneficiary who is an absentee person.

This 20% tax will significantly exceeds any rental income – great care is needed if potentially relevant. And the obligation is on the owner to advise SRO of their absentee status.

 

 

AcctWeb

Debate heats up around $10k cash ban bill

Concerns around a bill that will criminalise business cash payments above $10,000 continue to be raised as the industry waits on a parliamentary committee’s final report.

         

 

A total of 2,659 submissions were received by the Senate Economics Legislation Committee in the course of its inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019, with the committee recently concluding its latest round of public hearings.

With the committee’s report due this Friday, the Australian Taxpayers’ Alliance has raised the temperature on the proposed measure, labelling it an “attack on economic freedom”.

“A $10,000 restriction on the use of cash would harm small businesses, give more power to corporate banks, and would fail to restrict any criminal activities,” said Australian Taxpayers’ Alliance policy director Emilie Dye.

“Many Australians still use cash and wish to continue using this legal tender for their privacy and security. Banks and electronic payment methods are not always reliable. Look at the bushfire crisis and the thousands of Australians forced to use cash during a natural disaster.”

The bill, which proposes to make it a criminal offence for businesses to make or accept a cash payment of $10,000 or more by introducing penalties of up to two years of imprisonment and a $25,200 fine for individuals, is currently before the Senate and was slated to come into effect from 1 January.

The Australian Small Business and Family Enterprise Ombudsman has also expressed its concerns with the bill, arguing that small businesses should not be disadvantaged in the marketplace where a customer chooses to pay with cash and the record keeping is compliant.

It also argues that regional and remote small businesses and pastoral family enterprises in rural Australia will be disadvantaged due to their lack of reliable access to internet and electronic banking facilities.

The major accounting bodies have been undecided on the measure, with some arguing that the law should not criminalise the use of legal tender, and others believing the cash ban should be extended to all payments.

In particular, CPA Australia has questioned the need to introduce criminal offences and penalties, noting that there are already a number of checks and balances in the system to address illegal activities where cash is involved.

“While we are aware that cash is an enabler of illegal activity, criminalising certain cash transactions in the manner proposed is an unnecessarily harsh response to the problem of avoiding scrutiny by the Commissioner of Taxation and other government agencies,” said CPA executive general manager Dr Gary Pflugrath in his submission to the committee.

“There has also been insufficient reasoning as to why criminal offences are seen as being the most appropriate solution or why the power to set exceptions should be delegated to the minister.

“We remain of the view the policy intent behind this bill would best be achieved by a mix of administrative penalties for breaches, but also incentives for business to move to electronic payment options.”

However, Chartered Accountants Australia and New Zealand (CA ANZ) believes there is merit in the measure, believing it will help level the playing field for small businesses, particularly in industries where cash transactions are common, including the building and construction industry, and motor vehicle sales and repairs.

“In a modern economy where the vast majority have access to, and regularly utilise, online payment arrangements, with cash usage in rapid decline, examples of situations where the cash payment limit will cause actual difficulty in day-to-day transactions are hard to find,” said CA ANZ tax leader Michael Croker.

“Yes, the measure is tough in terms of sanctions, but CA ANZ continues to agree with the simplicity and interoperability rationale for this measure — and the policy arguments more generally — which were articulated so well in the Final Report of the Black Economy Taskforce.”

 

 

Jotham Lian 
04 February 2020
accountantsdaily.com.au

 

 

 

There’s still time to move to Single Touch Payroll (STP)

It’s not too late to join the other 550,000 employers who are reporting through Single Touch Payroll (STP), but time is running out.

         

 

If you aren’t reporting through STP, you can start by:

  • finding a software solution that’s right for you.
  • asking for a concession. This could be reporting quarterly at the same time as your activity statement. Eligibility will depend on your circumstances.
  • asking for more time if you're not ready.

We understand that it takes time to transition to STP, but there are a range of options to assist your transition. Watch our video of a small business owner's experience transitioning to STP.

If you have been affected by a natural disaster, there is additional support available and we will help you sort out your tax affairs later.

Remember, registered tax agents can help you with your tax.

Find out more about:

 

ATO

 

 

 

Real Time World Population Growth – Wow!!

Watch as the world population changes every second of the day or see where everyone is.

           

 

Knowing exactly what’s happening with the World’s population can be both intriguing and a bit scary at the same time. Just getting one’s head around the rate of increase and where all these people live is a daunting task. But given the issues facing the world today learning a bit more about all its peoples is worth knowing.

Click here to view the interactive information contained in the image below but also click here to see how all these people fit across all the countries of the world.

 

 

 

 

 

ATO audits continue to target Lifestyle assets

Around 350,000 high-net-worth taxpayers with lifestyle assets are set to undergo scrutiny from the ATO after it revealed it would obtain five more years of policy details from insurers.

         

 

The ATO has today revealed its request to receive a further five years’ worth of policy information from over 30 insurance companies about taxpayers who own marine vessels, thoroughbred horses, fine art, high-value motor vehicles and aircraft.

The request will see the Tax Office’s lifestyle assets data-matching program extended up to 2019–20, with the agency already holding insurance policy information for the 2013–14 and 2014–15 financial years.

Marine vessels over the value of $100,000, motor vehicles worth over $65,000, thoroughbred horses worth over $65,000, fine art over $100,000 per item, and aircraft worth over $150,000 all fall within the ATO’s data-collection scope.

The Tax Office will use this information to form a more complete picture of a taxpayer’s financial situation to ensure they are fulfilling their tax and superannuation reporting obligations.

ATO deputy commissioner Deborah Jenkins said that while the Tax Office anticipates receiving information about assets owned by around 350,000 taxpayers, the data would not be used to initiate automated compliance activity.

“Taxpayers selected for compliance activities are identified through other methodologies. The data is made available to our compliance teams to support their risk profiling of the selected taxpayers. Existence of an insurance policy may or may not prompt the compliance officer to pursue a particular line of inquiry,” Ms Jenkins said.

“If a taxpayer is reporting a taxable income of $70,000 to us but we know they own a $3 million yacht, then this is likely to raise some red flags.

“Regardless of your level of wealth, we all need to pay the correct amount of tax, and this data will allow us to ensure those people who can afford these kinds of items are doing the right thing, along with everyone else.”

The ATO will retain each financial year’s data for five years from receipt of the final instalment of verified data files from the data providers.

Ms Jenkins also noted that aside from helping identify taxpayers who may be understating their income, the data from insurers may be used by the ATO to identify taxpayers who have made capital gains on the disposal of certain assets but who have not declared this to the ATO.

“With high-value assets like fine art, there can be some significant capital gains made when these assets are sold, and capital gains tax may need to be paid on the sale or disposal of these items,” Ms Jenkins said.

The data will also be used by the ATO to identify incorrect goods and services tax (GST) input tax credits where taxpayers are purchasing the assets for purely personal reasons and claiming GST credits as if the item was a business asset.

Self-managed superannuation funds that the ATO suspects may be acquiring lifestyle assets purely for personal enjoyment of the fund’s trustee or beneficiaries are also likely to be looked at by the ATO.

Insurers are required to provide the ATO with policy information where the value of assets is equal to or exceeds the following thresholds:

  • Marine vessels $100,000
  • Motor vehicles $65,000
  • Thoroughbred horses $65,000
  • Fine art $100,000 per item
  • Aircraft $150,000

 

Jotham Lian 
18 December 2019
accountantsdaily.com.au

 

 

 

Property deduction errors down to ‘lack of understanding’: ATO

A fundamental knowledge gap is continuing to trip property investors up, leading to simple mistakes and heaping pressure on tax agents, the ATO has revealed.

         

 

Last year, the ATO singled out rental property deductions as a “top priority” for the agency, with Commissioner of Taxation Chris Jordan claiming that errors were found in almost 90 per cent of returns.

For tax time 2019, the ATO doubled its number of in-depth audits for rental deductions to 4,500, with a specific focus on overclaimed interest, capital works claimed as repairs, incorrect apportionment of expenses for holiday homes let out to others, and omitted income from accommodation sharing.

Speaking on sister title Smart Property Investment’s podcast, ATO acting assistant commissioner of individuals and intermediaries, Adam O’Grady said a vast majority of these errors were down to “simple mistakes” from investors and failing to disclose information to their accountants at tax time.

“What we find when we do review returns and audit people is more often than not, it's a simple mistake or it's a lack of understanding of what they're allowed to do, what they're not allowed to do,” said Mr O’Grady.

“The vast majority of people don't deliberately go out to claim things they shouldn't or obtain refunds. Those that do, finish up in front of the courts and prison and those sorts of things.

“It's really that lack of education, that lack of understanding. So, what we hear stories of when we sort of audit, they walked up to their accountant and said, ‘Oh, here's my income from the real estate agent. Here are my line statements; I don't know about the rest of the expenses,” and just sort of scribble it down on a notepad and paper and say, ‘Oh, look, that's about what I think it is.’”

Mr O’Grady acknowledged that accountants are often at the mercy of their investor clients, noting that they are only as good as the information provided to them by their clients.

“Accountants out there are highly skilled, they understand the tax law, they can really help you, make sure you're structured in the right way and help you set up the proper recording requirements and all those sorts of things. But, they can only do that if you're open and honest with them,” said Mr O’Grady.

“You need to talk to your accountant, explain what you've done, why you've done it, how you've set it up, and then they can give you that right advice. But [if] you don't tell the accountant, they're not giving you the advice you need.”

Sharing economy focus

Mr O’Grady said investors receiving income from short-term rentals through sharing economy platforms such as Airbnb should be aware of the ATO’s new data-matching program that will identify taxpayers who have left out rental income and over-claimed deductions.

“Last calendar year for the first time, we actually collected data off a lot of these platforms, so we can see who rented their property out, for how long, what sort of income they earned from it, and we're working through that data and comparing that to tax returns to understand people that haven't reported that income or haven't reported the full amount, all those sort of things,” said Mr O’Grady.

“What we've been doing with the data we've acquired recently, is actually writing to people and giving them really an opportunity to self-correct their own return.

“It's more in that trying to educate people, that we can see you've got this income, you need to go and fix up your own affairs, and from this point forward, make sure you're reporting correctly,” he added.

“On top of that, we will use the data to audit people. So those, we do have some examples where people are on these platforms renting out 10, 20, 30 properties or rooms across various properties and not reporting on their tax obligations. So for those people, again, we'll take a pretty firm stance.”

 

 

Jotham Lian
31 January 2020
smsfadviser.com

 

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